BOOKKEEPING GLOSSARY · ACCOUNTS THAT CONFUSE PEOPLE
Clearing Account
Last Updated: October 5, 2026A clearing account is a temporary account used to hold one side of a transaction until the other side arrives, and its defining feature is that it should return to zero. It is the standard tool for handling payment processors, inter-company transfers and payroll — and a clearing account with a permanent balance is always a signal that something is unresolved.
Why You Need One
Some transactions arrive in two halves, days apart. A customer pays Stripe today; Stripe pays you in three days, net of fees. If you only record the deposit, you have lost the gross sale, the fee and the timing.
A clearing account lets you record both halves honestly. Gross sales go into the clearing account when they occur. Fees come out of it. The payout comes out of it and into the bank. What remains is money the processor is holding — a real asset at month end.
The same pattern handles payroll (gross wages in, net pay and tax remittances out), inter-company transfers, and any situation where money is in flight across a reporting date.
The Zero Rule
A clearing account is only useful if someone checks that it clears. The balance at any moment should be explainable in one sentence: “this is what the processor owes us as at today.”
When the balance is not explainable, the account has stopped being a control and become a dumping ground. The usual causes: a refund recorded on one side only, a fee that was never posted, a payout matched to the wrong period, a chargeback that reversed in a later month.
Checking it monthly keeps the investigation to one month of activity. Checking it annually means reconstructing twelve.
Clearing Versus Suspense
They are often used interchangeably and they are not the same.
A clearing account is used deliberately for transactions that genuinely have two halves, and it is expected to clear as a matter of routine. A suspense account is where something goes because nobody knows yet what it is. One is a process; the other is a question waiting to be answered.
Both should be empty at the year end. Only one of them is supposed to have things in it during the month.
Clearing Account FAQs
What should the balance of a clearing account be?
Explainable in one sentence — typically what a processor or counterparty owes you as at that date — and zero once everything has settled. A balance nobody can explain means the account has stopped being a control and become a dumping ground.
Is a clearing account the same as a suspense account?
No. A clearing account is used deliberately for transactions with two halves and is expected to clear as routine. A suspense account holds something nobody has identified yet. One is a process; the other is an unanswered question. Both should be empty at year end.
Related Terms
Clearing Accounts That Actually Clear
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